Tech start-ups’ teething time

Tech start-ups’ teething time

If there was one lesson learnt from the tragicomic dramas of the dot-com era, it was about keeping the developer and funder community in the loop on the technology pipelines of start-ups—something that minimized duplication and absurdities. One logical outcome was the mushrooming of showcases and launch forums.

The experience in India has been no different. In recent years, several such platforms have emerged, including one that has the might of Microsoft behind it and which promises to handhold product start-ups in the country.

On Friday, strutting their stuff, five start-ups walked away with mementos and assurances that the software giant and its collaborators would help meet their growth and marketing challenges.

Let’s hope the leaders walk the talk, for the signs from the industry aren’t particularly encouraging. The latest report from Browne and Mohan shows that for the first time, Indian software product companies saw a decline in revenue in fiscal 2010. Many witnessed a fall in new licence revenue; some did not roll out their products; for others, closures never happened. Then there were those that fled the scene in favour of services, including 53 start-ups in the mobile space.

This is a demoralizing statistic for an industry that’s just overcoming self-doubt and the stereotype that services is all that enthuses Indian entrepreneurs.

Some challenges facing product firms are evident: International vendors are aggressively increasing their clout in India; lucrative verticals such as e-governance and defence, seen as a lifeline for many local technology start-ups, are proving to be a disappointment as entry barriers have been raised. It’s a worrying sign, as even firms such as Oracle and Microsoft trace their initial success to unconditional government support in the US.

Additionally, traditional handicaps remain. Global sales remain costly for the sector that already has a weak global positioning and weaker branding. For sound tech products, access to the global market is critical, as Indian consumers are notorious for paying low prices.

The existential dilemma— whether the product comes first or the market—continues to baffle many entrepreneurs. But the key is to maintain clarity even if that sometimes means changing business models. No less important is the focus on product and service teams to remain separate within the organization.

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